A B.C. economist has identified four critical trends that will help construction leaders understand and deal with an unprecedented period of rapid change in the global economy.
“We are living in a period of intense change,” said economist and business analyst Michael Campbell.
“I believe this will be the period in the next 20 years. The problem with change is that it creates a lot of losers, and there are winners. Your job is to be on the winning side and not on the losing side.”
Campbell delivered this message to a room full of construction leaders at the Independent Contractors and Businesses Association CEO Breakfast, which was held at Buildex Vancouver on Feb. 13.
Campbell identified the rapid pace of technological change as the first key trend business people need to get a handle on.
The second major trend is the collapse of Europe as a global power and the rise of emerging economies, such as China and India.
According to Campbell, the second major trend can be revealed by looking closely at high rates of unemployment in Europe, which is leading to social upheaval.
“Europe has clearly passed its good by date and we are watching this societal breakdown,” said Campbell, noting that Spain and Portugal are experiencing 25 per cent unemployment and about 50 per cent youth unemployment.
The third major trend is the decline of big government and the welfare state all over the world.
He said governments are struggling to maintain the status quo in terms of spending on health care and education because the math behind this public sector model is no longer adding up.
“Everywhere you look people are making choices away from the government because the trust level is low,” said Campbell.
“This is the trend and it’s all about confidence. This lack of confidence will have a phenomenal impact on interest rates, currency values, the stock market and interest rates.”
However, this shift away from the public sector should not be a major cause for concern, because it represents an opportunity for the private sector.
Finally, Campbell identified demographics as the fourth key trend.
For example, there are more people over the age of 65 in Canada than people less than 15 years old.
As a result of longer life expectancy and an aging population, government regardless of party will have to increase spending.
This shift has serious implications for spending on health care, which will eventually become unsustainable.
“The big deal in economics and finance in the next 20 years is how we will deal with the incredible need for money and what are the implications,” said Campbell, who warned the crowd that government would go after successful individuals and businesses to make up the short fall.
Despite the fact that these factors will generate slow growth in Canada during 2013, strong private sector investment and economic growth is inevitable.